Hong Kong has reaffirmed its ambition to become a global digital asset hub with the release of the Hong Kong Digital Asset Development Policy Declaration 2.0 on June 26, 2025. This strategic update builds on previous regulatory advancements—such as the Securities and Futures Commission’s (SFC) ASPIRe roadmap—and introduces a comprehensive framework to accelerate the adoption, regulation, and real-world integration of digital assets.
The updated declaration centers around the LEAP framework, an acronym representing four core pillars: Legal and regulatory streamlining, Expanding the suite of tokenised products, Advancing use cases and cross-sectoral collaboration, and People and partnership development. Together, these initiatives aim to create a trusted, sustainable, and economically integrated digital asset ecosystem.
The LEAP Framework: A Roadmap for Growth
1. Legal and Regulatory Streamlining
A clear and consistent regulatory environment is foundational to market confidence. The policy outlines a unified approach to oversight across key sectors of the digital asset industry.
- Centralized Regulatory Oversight: The SFC will serve as the primary regulator for digital asset trading service providers and digital asset custodians, responsible for licensing, registration, standard-setting, and process optimization.
- Collaborative Supervision with HKMA: The Hong Kong Monetary Authority (HKMA) will continue to supervise banks engaging in digital asset trading and custody activities, ensuring alignment between traditional finance and emerging digital markets.
- Public Consultation Coming Soon: The Financial Services and Treasury Bureau (FSTB) and SFC are preparing to launch public consultations on licensing mechanisms for trading and custody service providers—marking a critical step toward formalized regulation.
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Additionally, Hong Kong reaffirms its commitment to international standards, including:
- IOSCO’s Policy Recommendations for Crypto and Digital Asset Markets
- FSB’s Regulatory Framework for Global Crypto-Asset Activities
- BCBS’s Prudential Treatment of Banks’ Crypto-Asset Exposures
- OECD’s Crypto-Asset Reporting Framework for tax transparency
These alignments ensure Hong Kong remains compliant with global best practices while tailoring regulations to local needs.
Tokenization Legal Review Underway
The FSTB and HKMA are leading a review of legal and regulatory frameworks to support broader tokenization. Initial focus will be on the bond market—where several successful proof-of-concept projects have already been completed—to assess settlement, registration, and record-keeping requirements for tokenized securities.
2. Expanding the Suite of Tokenised Products
Hong Kong is moving beyond experimentation into institutionalization by expanding the range of tokenized financial and real-world assets.
Government Bonds Go Digital—Permanently
Following two successful issuances totaling approximately HK$6.8 billion in tokenized green bonds, the government will routinize tokenized government bond issuance. This signals long-term commitment to blockchain-based capital markets infrastructure.
Real-World Asset Tokenization Accelerates
Multiple initiatives are underway to unlock liquidity in traditionally illiquid assets:
- Ensemble Project (HKMA): Exploring a shared infrastructure for interbank settlement of tokenized deposits and funds. Future use cases include tokenized money market funds and income-generating real-world assets.
- Precious & Industrial Metals: With the London Metal Exchange now including Hong Kong in its global warehouse network, the government encourages the use of tokenization and physical asset tracking technologies in storage programs.
- Renewable Energy Assets: Pilot projects may soon tokenize solar panel arrays and other clean energy infrastructure, enabling fractional ownership and investment access.
Tax Clarity Enhances Market Appeal
To boost institutional participation:
- Stamp duty exemption for ETF transfers on the Hong Kong Stock Exchange now extends to tokenized ETFs.
- Legislative proposals will allow specified digital assets to qualify for profits tax exemptions under private fund and family investment holding vehicle regimes. If passed, this will take effect from the 2025/2026 tax year.
3. Advancing Use Cases and Cross-Sector Collaboration
Regulation alone isn’t enough—adoption requires practical applications and strong partnerships.
Stablecoin Regulation Takes Effect August 1, 2025
Starting August 1, 2025, Hong Kong will implement a full regulatory regime for stablecoin issuers. The framework includes strict requirements around:
- Reserve asset management
- Price stability mechanisms
- Redemption processes
- Prudential risk controls
Market participants are invited to submit proposals on how licensed stablecoins can be tested and deployed in areas like payments, remittances, and programmable finance.
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Digital Infrastructure & Innovation Support
- Cybersecurity & RegTech: The government encourages development of locally adapted regulatory technology, cybersecurity tools, and monitoring solutions tailored to digital asset markets.
- Hong Kong Cyberport: Will launch a Blockchain and Digital Asset Pilot Funding Scheme, offering financial support and expert guidance to high-potential projects in Web3, tokenization, and decentralized finance.
- InvestHK: Ready to assist digital asset firms looking to establish or expand operations in Hong Kong.
Transparent Market Data Now Available
Hong Kong Exchanges and Clearing Limited (HKEX) has launched its first suite of digital asset indices, providing transparent, reliable benchmarks for Bitcoin and Ethereum prices within the Asian time zone—enhancing price discovery and investment decision-making.
4. People and Partnership Development
Talent and collaboration are critical to sustaining innovation.
- Cyberport will play a central role in building a stable pipeline of skilled professionals in blockchain development, AI integration, and digital asset innovation.
Strategic partnerships between universities and industry players will drive applied research in:
- New blockchain architectures
- Tokenization frameworks
- AI-powered financial analytics
- Enhanced coordination among regulators and law enforcement agencies will strengthen market integrity.
- Hong Kong also commits to active participation in international regulatory dialogues, ensuring alignment with global trends while promoting cross-border interoperability.
Frequently Asked Questions (FAQ)
Q: What is the LEAP framework?
A: LEAP stands for Legal streamlining, Expanding tokenised products, Advancing use cases, and People development. It's Hong Kong’s strategic blueprint for building a mature digital asset ecosystem.
Q: When does Hong Kong’s stablecoin regulation take effect?
A: The regulatory regime for stablecoin issuers will go live on August 1, 2025, with detailed rules on reserves, redemption, and risk management.
Q: Are tokenized ETFs taxed differently than traditional ETFs?
A: No. Transfers of tokenized ETFs listed on the Hong Kong Stock Exchange are exempt from stamp duty—same as conventional ETFs.
Q: Will banks be allowed to offer crypto custody services?
A: Yes. Banks can provide digital asset custody services under HKMA supervision, while the SFC regulates non-bank custodians.
Q: Is Hong Kong open to foreign digital asset companies?
A: Absolutely. InvestHK actively supports international firms setting up in Hong Kong, with streamlined licensing and access to Asia’s financial gateway.
Q: How is Hong Kong ensuring investor protection in digital markets?
A: Through robust licensing regimes, adherence to international standards, mandatory disclosure requirements, and coordinated oversight between the SFC, HKMA, and enforcement agencies.
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Hong Kong’s Digital Asset Development Policy Declaration 2.0 marks a pivotal shift from exploration to execution. By combining forward-looking regulation with concrete market incentives, talent development, and real-world use cases, Hong Kong is positioning itself at the forefront of the global tokenized economy.
With clear timelines, active public engagement, and strong institutional backing, the city is not just embracing digital assets—it's building the infrastructure to lead their evolution.